Other than the mandates of the Internal Revenue Code (IRC) and a few other ineff

Question

Other than the mandates of the Internal Revenue Code (IRC) and a few other ineffectual reporting and disclosure requirements, benefit programs were practically unregulated by the federal government before the major shift that came with the enactment of the Employee Retirement Income Security Act (ERISA) of 1974, which was primarily aimed at traditional defined benefit (DB) pension plans but applicable to other employer-sponsored retirement and benefit programs. What is the government’s current role in regulating the administration of employee benefits? Do you think there is too little or too much government intervention? Why?

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Explanation / Answer

The government at present is running a qualified retirement plan. This plan is one which receives certain valuable federal tax benefits. Do we feel that there is too much government intervention in this? The answer to that is certainly yes. This plan’s design, funding and administration has to meet an extraordinarily complex set of federal statutory and regulatory requirements. Most federal regulations here preempts state and local regulation. The simple point is that government can have its battery of checks but they have to simplify them so that their intervention reduces. As this is so complex government intervention is inevitable.

However, the truth is also that the government does not mandate employers to put up plans for employee benefits. Plans are voluntarily also established by the employer and they only look after it. The government intervention in such scenarios is less where they keep a check if the plans established are maintained in a fair and sound manner.

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